IT budgets holding the line

IT BUDGETS APPEAR TO BE HOLDING THEIR OWN IN 2008, despite the economic downturn, according to a worldwide IT budget update survey of more than 1,000 CIOs conducted by Gartner Executive Programs (EXP) in the first quarter of this year.

Where economic conditions are changing, the IT response can generally be described as cost conscious rather than cost cutting, said Gartner. The projected global IT budget growth originally forecast for 2008 remains at 3.3 percent, which is in keeping with average increases in recent years.

While 62 percent of CIOs reported no change in their 2008 IT budgets, 23 percent indicated a decline in their budgets, and 15 percent reported an increase. Of those reporting a decline, the decrease averaged 10 percent of their committed 2008 budget. Those reporting an increase pegged the amount at approximately 15 percent.

Past experiences indicate that IT budget cuts lag economic conditions, making now and the 2009 planning process the real battle for the IT budget. CIOs who have concentrated on managing IT spend, rather than showing tangible value, face lower budgets the next year. The reason is simple: If you have managed to do without this year, then why not next, particularly when IT has gone above the norm to do more with less? That’s the essence of the “good management penalty” facing CIOs.

In an environment of macroeconomic uncertainty, Gartner said it becomes even more crucial for CIOs to highlight the business impact of IT to demonstrate the returns generated by IT resources. It advised turning up the volume on the connection between IT investments and business performance, providing peers with better insight into top-line revenue, and addressing the question of how IT can change the company’s cost structure rather than just cut IT spending.

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